Weekly Investor – September 9, 2019
A Positive Week
Stocks traded higher during the Labor Day shortened week. The biggest macroeconomic driver of the market continues to be U.S.-China trade news. Last Thursday, it was announced that in-person trade talks would resume in Washington, D.C. in October. This was welcomed compared to the last few weeks when it appeared both sides were hardening their trade stances by threatening higher tariffs. U.S. economic news further strengthened last week as job numbers, factory orders, durable goods and non-manufacturing data all beat economists’ expectations. The Federal Reserve also made comments last week hinting that rate changes will continue to support our economic expansion.
Overall, the S&P 500® Index is only 1.5% off its all-time high set on July 26, 2019. While earnings season wound down a few weeks ago, there were still a few quarterly announcements last week. DocuSign, Inc., the world’s largest eSignature solution, soared over 20% last Friday after it announced continued customer growth along with quarterly revenue nearly 7% higher than previous guidance. Lululemon Athletica Inc. closed last week at an all-time high, up over 10%, after announcing earnings and revenue well ahead of Wall Street’s estimates and raised revenue and earnings guidance. Looking ahead to this week, tariff news will likely be top of mind for investors.
The S&P 500 was up 1.8% for the week. Its top-performing sectors were Energy (2.6%) and Consumer Discretionary (2.6%), while the bottom-performing sectors were Health Care (0.7%) and Utilities (0.4%). In the fixed-income market, the 10-year Treasury yield was up, ending at 1.6%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Change-Based Investment
ON Semiconductor Corporation designs, manufactures and markets semiconductor components for electronic systems and products worldwide. The company was founded in 1999 and is headquartered in Phoenix, Arizona.
ON is well-positioned to benefit from the increasing use of electronic components in everyday life and ON has made acquisitions to further its exposure in these areas. It acquired Quantenna, Aptina, as well as Fairchild Semiconductor. These acquisitions allow ON to generate more of its revenue from the auto industry. We believe this market will grow for ON as the number of sensors and cameras on cars increase. ON’s acquisitions also expand the company’s exposure to the Internet of Things (IoT) or the increase in connected devices. Recently, ON’s stock has been pressured over global growth concerns and a potential slowdown in the automobile industry. Argent believes ON’s low valuation, new products and increased market share make the stock a good fit for Argent’s Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. (Google) | 7.5% |
| Mastercard, Inc. | 5.8% |
| Fiserv, Inc. | 5.3% |
| Post Holdings, Inc. | 5.3% |
| Target Corporation | 4.8% |
Small Cap Core
| Fortinet Inc. | 3.0% |
| World Fuel Services | 2.7% |
| Atkore International Group | 2.6% |
| Vonage Holdings Corp. | 2.6% |
| OneMain Holdings, Inc. | 2.5% |
Dividend Select
| JPMorgan Chase & Co. | 5.6% |
| Target Corporation | 5.1% |
| Microsoft Corporation | 4.4% |
| Marvell Technology Group | 4.3% |
| Comcast Corporation | 4.0% |
Mid Cap
| Cintas Corporation | 4.1% |
| CDW Corporation | 4.0% |
| Bright Horizons Family | 3.6% |
| NVR, Inc. | 3.4% |
| Amedisys, Inc. | 3.3% |
This newsletter presents selected recommendations from portfolio managers of Argent Capital Management LLC, a registered investment advisor. Opinions reflect the portfolio manager’s judgment on the date above and are subject to change. A list of stocks recommended by Argent is available upon request. You should not assume that these recommendations are or will be profitable. In the course of it’s business, Argent’s client accounts may be buying and selling these stocks.
